CIR vs SM Prime

CIR vs. SM Prime Holdings, Inc.

February 26, 2010 DEL CASTILLO, J.:  J.:

FACTS:

SM Prime Holdings, Inc. (SM Prime) and First sia !ealty "e#elo$ment %or$oration (First sia) are domestic cor$orations duly organi&ed and e'isting under te las o* te !e$ublic o* te Pili$$ines. +ot are engaged in te business o* o$erating cinema ouses, among oters. CTACase No. 7079

n Se$tember 26, 200-, te +ureau o* Internal !e#enue (+I!) sent SM Prime a Preliminary ssessment otice (P) *or #alue added ta' (/) de*iciency on cinema ticet sales in te amount o* P11,236,043.40 *or ta'able year 2000 . In res$onse, SM Prime *iled a letter5$rotest letter5$rotest dated "ecember 1, 200n Se$tember 6, 2004, te +I! denied te $rotest *iled by SM Prime and ordered it to $ay te / de*iciency *or  ta'able year 2000 in te amount o* P124,0-,734.12.

CTACase No. 7085

n May 1, 2002, te +I! sent First sia a P *or / de*iciency on %inema ticet sales *or ta'able year 1 in te total amount o* P-,72-,670.-. First sia $rotested te P in a letter  dated 8uly , 2002. n Se$tember 6, 2004, te +I! rendered a "ecision denying te $rotest and ordering First sia to $ay te amount o* P-,72-,670.- *or / de*iciency de*iciency *or ta'able year 1 .

CTA Case No. 7111

n $ril 16, 2004, te +I! sent a P P to First sia *or / /  de*iciency de*iciency on cinema ticet sales *or ta'able year 2000 in te amount o* P-,740,7.37. First sia $rotested te P troug a letter dated $ril 22, 2004. n ctober , 2004, te +I! denied te $rotest and ordered First sia to $ay te / de*iciency in te amount o* P-,740,7.37 *or ta'able year 2000 .

CTACase No. 7272

 Re:  Re: Asse Assess ssme ment nt Noti Notice ce No. No. 008008-02 02  P P *or / / de*iciency de*iciency on cinema ticet sales *or te ta'able year 2002 in te total amount o* P-2,702,12.21 as issued against First sia by te +I!.  Re:  Re: Asse Assess ssme ment nt Noti Notice ce No. No. 003003-03 03  P P *or / / de*iciency de*iciency on cinema ticet sales in te total amount o* P27,16,-36.46 *or te ta'able year 200- as issued by te +I! against First sia. sia. n May 11, 200, te +I! rendered a "ecision denying te $rotests.

 SM Prime *iled a Motion to %onsolidate % %ase os. 307, 3111 and 3232 it % %ase o. 303 on te grounds tat te issues raised terein are identical and tat SM Prime is a ma9ority sareolder o* First sia

 Ruling of the CTA First Diision

!esorting to te language used and te legislati#e istory o* te la, it ruled tat te acti#ity o* soing cinematogra$ic *ilms is not a ser#ice co#ered by / under te ational Internal !e#enue %ode (I!%) o* 13, as amended,  but an acti#ity sub9ect to amusement ta' under ! 3160, oterise non as te :ocal ;o#ernment %ode (:;%) o*  11. %iting House 8oint !esolution o. 1-, entitled Joint Resolution Expressing the True Intent of ongress !ith Respect to the  "re#$iling T$x Regime in the The$ter $n% &oc$l 'ilm In%ustr( onsistent !ith the )t$tes "olic( to *$#e $ +i$,le )ust$in$,le $n% ompetiti#e The$ter $n% 'ilm In%ustr( $s ne of its "$rtners in N$tion$l /e#elopment te % First "i#ision eld tat te House o* !e$resentati#es resol#ed tat tere sould only be one business ta' a$$licable to teaters and mo#ie ouses, ic is te -0< amusement ta' im$osed by cities and $ro#inces under te :;% o* 11. Furter, it eld tat consistent it te States  $olicy to a#e a #iable, sustainable and com$etiti#e teater and *ilm industry, te national go#ernment sould be $recluded *rom im$osing its on business ta' in addition to tat already im$osed and collected by local go#ernment units. e % First "i#ision lieise *ound tat !e#enue Memorandum %ircular (!M%) o. 2752001, ic im$oses / on gross recei$ts *rom admission to cinema ouses, cannot be gi#en *orce and e**ect because it *ailed to com$ly it te $rocedural due $rocess *or ta' issuances under !M% o. 20576.

 Ruling of the CTA !n "an#

e % En $nc eld tat Section 107 o* te I!% actually sets *ort an e'austi#e enumeration o* at ser#ices are intended to be sub9ect to /. nd since te soing or e'ibition o* motion $ictures, *ilms or mo#ies by cinema o$erators or $ro$rietors is not among te enumerated acti#ities contem$lated in te $rase sale or e'cange o* ser#ices, ten gross recei$ts deri#ed by cinema= teater o$erators or $ro$rietors *rom admission ticets in soing motion $ictures, *ilm or mo#ie are not sub9ect to /. It reiterated tat te e'ibition or soing o* motion $ictures, *ilms, or mo#ies is instead sub9ect to amusement ta' under te :;% o* 11. s regards te #alidity o* !M% o. 2752001, te %  En $nc agreed it its First "i#ision tat te same cannot be gi#en *orce and e**ect *or *ailure to com$ly it !M% o. 20576.

ISSUE: re te gross recei$ts deri#ed by o$erators or $ro$rietors o* cinema=teater ouses *rom admission ticets

sub9ect to />

HELD:

 . ?ile (1) te enumeration under Section 107 on te /5ta'able ser#ices is not e'austi#e and (2) te said list includes @te lease o* motion $icture *ilms, *ilms, ta$es and discsA, te said acti#ity oe#er is not te same as soing or e'ibition o* motion $ictures or *ilms. us, since te soing or e'ibition o* motion $ictures or *ilms is not in te enumeration, te %I! must so tat it *alls under te $rase @similar ser#icesA.

The enumer$tion of ser#ices su,1ect to +AT un%er )ection 08 of the  NIR is not exh$usti#e Section 107 o* te I!% o* te 13 readsB SC%. 107. /alue5added a' on Sale o* Ser#ices and Dse or :ease o* Pro$erties. () !ate and +ase o* a'. ere sall be le#ied, assessed and collected, a #alue5added ta' eEui#alent to ten $ercent (10